The State and the Allocation of Resources

‭The State and the allocation of resources‬ ‭ tate facing market failures:‬ S ‭A necessary intervention to ensure competition:‬ ‭a)‬‭For optimal allocation of resources:‬ ‭According to neoclassical analysis, the market allows optimal allocation of CPP resources‬ ‭(‬‭atomicity, transparency, homogeneity, free entry‬‭and exit, mobility of f of Y‬‭), because they‬ ‭are encouraged to lower their costs (at LT, no profit) and to innovate to resist the design.‬ ‭ b: on certain markets, low number of E (oligopoly) or presence of a single firm (monopoly)‬ P ‭compromises efficiency because the E have market‬‭power‬‭which‬‭allows them to increase prices -‬ ‭a sub-optimal situation (because some consumers therefore give up consuming)‬ ‭-Summary: designed for pricing and innovation.‬ ‭b)‬ ‭Link between regulation and growth‬ ‭Theoretical relationship:‬ ‭Regulations create barriers‬‭to entry‬‭:‬ ‭Direct effects:‬‭Less design - + margins -‬‭price increase‬‭-movement‬‭of PS in WSPS to the right‬ ‭(because what increases prices moves PS to the right) -‬‭increase in unemployment‬‭.‬ ‭ ffect of LT‬‭:monopoly not‬‭encouraged to innovate‬‭.‬‭Deregulation therefore does not encourage‬ E ‭the creation of escape competitions.‬ ‭ BI and PMR measurement:‬ D ‭DBI‬‭:Doing business index is the ease of doing business‬‭index:‬ ‭-France, it takes one day to create an E // Venezuela, it takes 150.‬ ‭ MR‬‭:Product market regulation (made by OECD), divided‬‭into 3 parts:‬ P ‭-‬‭State control‬‭:owner of E? Involvement in commercial‬‭operations (price control, etc.)?‬ ‭-‬‭Barriers to entrepreneurship‬‭:barriers to entry. In‬‭Fr, the problem is regulatory complexity (high‬ ‭administrative cost on SMEs, etc.)‬ ‭-‬‭Barriers to trade and I‬‭:barriers to FDI, DD etc.‬‭it's mainly a PED problem, not in France.‬ ‭On average across the OECD, countries have made progress regarding: the removal of‬ ‭price control measures, and the simplification of administrative procedures regarding‬ t‭ he creation of E (IDB).‬ ‭-The most important additional possibilities for improvement are: capitalistic presence of the‬ ‭State and‬ ‭governance of public E / obstacles to design in the network sectors / services‬‭.‬ ‭ )‬ c ‭The impact of regulations in France,‬ ‭examples:‬‭The case of hard discount:‬ ‭Royer law‬‭1973‬‭had a negative impact on retail employment‬‭growth:‬ ‭This law established a specific‬‭prior authorization‬‭procedure of‬‭commercial exploitation‬ ‭applying to the creation projects of retail‬‭business‬‭sales area >1000m2(>300m2 from 1996…).‬ ‭Objective: to protect employment in small businesses, to the detriment of job creation in‬ ‭large areas.‬ -‭ Failure :‬‭Bertrand and Kramarz‬‭,‭D ‬ oes entry Regulation‬‭Hinder Job creation?‬‭2002‬‭: the‬ ‭departments where entry restrictions have been the strongest are also those where job creation in‬ ‭the sector has been the weakest. These barriers to entry have notably resulted in an increase in‬ c‭ oncentration of local large distributors, whose pvr on sales prices was reinforced: we wanted to‬ ‭favor small city center businesses, we finally favored Leclerc.‬ ‭-‬‭In 2004, the price difference between 2 hypermarkets‬‭of the same group, whether or not‬ ‭located in a competitive zone, could reach 20%.‬ -‭ Answer :‬‭2008‬‭,‭e ‬ conomic modernization law‬‭(LME):‬‭objective‬‭is + E and + designed for three‬ ‭concrete results:‬‭+ de -, + jobs, + PA‬‭. Raises the‬‭threshold for authorization of large surface‬ ‭areas from 300 to 1000m2. Add:‬‭credible threat of hard‬‭discount - 20% market share in‬ ‭volume, 15% in value.‬ ‭ he case of taxis:‬ T ‭In 2000, 15k taxis in Paris (as many as in the 1920s). The arrival of VTCs has made it possible to‬ ‭multiply the number of taxis by 2 and reduce margins.‬